Table of contents

1. Introduction..................................................................................................................3

2. Interaction of resources between households, business, and government.............. 4

3. Scarcity, market mechanisms, price elasticity, gross domestic............................... 6 product (GDP), and foreign exchange

4. Trade and productivity............................................................................................... 8

5. Unemployment, inflation, and the business cycle..................................................... 8

6. Classical and Keynesian economics and aggregate supply and demand................ 9

7. Conclusions and outcomes..........................................................................................10

1. Introduction:
The name of my company is Compact Atomic. Our company was created in March of 2014 by a team of highly specialized engineers that spent most of their careers working in research and development for corporate America, in the nuclear energy space. The idea to start a company came during lunch, on a typical week day as the founders were brainstorming for fun. The goal to produce self contained compact nuclear reactors had been murmured between them for a while, but conversations turned into actions, and soon after, they turned their backs on their stable and high-paying jobs, offered their resignations, and went on to pursue their dreams. Creating a company was easy, but getting funds to get it off the ground was not an easy task. The team took advantage of every connection and contact that they had developed through the years and were able to schedule several presentations with a few silicon valley venture capitalists. Soon after, funds were finally available to start thinking of designing a prototype, and eventually a consumer-ready product. The quality of the first line of products was not great, and the company suffered, but after some more research, the new line of compact reactors are a clear improvement in reliability and efficiency. The new line of products is truly revolutionary. It’s called the X-series, and the concept is straightforward, these are small, compact nuclear reactors, that can provide endless power to your home, business, or automobile for years with little maintenance at a small cost. Like their big brothers - the industrial reactors, the X-series reactors use atomic fission to generate intense heat, which turns water that is supplied to the reactor into high-pressure steam. The steam turns a electric turbine with generates electricity. Each of the compact reactors is installed underground next to a house or business for added protection against accidents and needs to be recharged every 10 years. The current product line includes:

X – Atom – Designed to power a typical home, this reactor is neatly buried in a backyard and powers a typical home for 10 years before maintenance is needed.

X – Biz – This larger commercial reactor provides 3 times the energy supply when compared with the residential model, and requires maintenance every 15 years.

X – Auto – The smallest of the series, can fit under the hood of most electric cars and completely solves the problem of the range for electrical vehicles by providing continued and nearly enless power. In addition to selling the above models, our company also provides maintenance including recharging of our compact reactors for a service fee. This generates a second income stream for the company, from the sale of the enriched uranium and other ancillary materials that are needed at every maintenance cycle. Our company has the advantage of being the first to bring this type of product to market, although several competitors are in the process of developing several products that will compete with our X-series of compact reactors within a few years.

2. Interaction of resources between households, business, and government:
Every home and business needs energy, and the average consumption of energy has been going up (Electronic use, 2016). Modern homes have an increasing number of gadgets and electronic equipment, and all of these have a voracious appetite for electricity (Fanara et al.,2015). It’s well understood that energy can come from different methods but not all are equally as good. One of the issues to consider is the impact that this increase in energy consumption has on the environment. Some of the traditional methods such as coal and natural gas discharge carbon dioxide into the air, which causes a number of environmental issues (Environmental Impact, nd). People are increasingly aware of the many issues that our footprint on the planet is creating, and if there is a solution that provides them the same level of service and quality in energy supply, with reduced impact on the environment this would be a more desirable solution. A home nuclear power generator also means that reliability increases. We’ve all been faced with power outages at different times, for example during severe storms, a downed tree in the neighborhood, transformer malfunction, or another problem in the electrical grid supply. All of these are beyond our control, and consumers typically simply sit and wait helplessly until power is restored. With personal nuclear power, there is no dependency on the electrical grid and all of its nuances, and consumers can rely on uninterrupted power supply even the electrical grid is down. There are also consumers that live in remote areas, and that are either not part of the electrical grid, or don’t have a reliable supply, and this product can be a permanent solution for them as well, including those who purposely want to have an “off the grid” lifestyle. The business climate is favorable at the moment from different perspectives. There is currently no similar solution in the market, and thus no competition. This means that our company is dominating this particular segment of the energy market and the only blocker to solid profitability has been the fact that our initial line of products were of questionable quality, which our new and improved X-series line can now replace. There are favorable government policies for companies that produce environment-friendly products (Programs –Clean Evergy, 2016), including tax breaks and grants, and this also applies to consumers (Gallagher et al., nd), which means that despite the considerable sticker price for our products, consumers can expect the real out-of-pocket cost to be lower once you consider the tax benefits of purchasing our units. It’s interesting to also consider the increasing desire from consumers to be environment-friendly. There has been recent research that shows that when people buy an electric car, or solar panels for their roofs, their decisions are sometimes motivated by a desire to be with the in-crowd, to be perceived as trendy and fashionable to their peers (Sexton & Sexton, 2011). There is actually a term that has been coined recently called Conspicuous Conservation, which is defined as “engaging in activities that are environmentally friendly in order to obtain or signal a higher social status” (Wade, 2010). It is an interesting social phenomenon that nevertheless plays well into the roadmap of our organization. Our company has applied to receive a Green Seal in the next few months. Green seal is a US-based company that awards a seal of approval to certain products that after rigorous testing and evaluation are found to cause less harm to the environment than other similar products. The feedback that we have been getting from their testing and evaluation has been positive across the board, and ultimately once we receive this certification, it will help solidify our reputation in the alternative energy products space. Government regulations in the nuclear energy field continues to be strict, but our company has maintained a direct line of communication with the United States Nuclear Regulation Commission during the phases of production and testing, to ensure that all approvals go smoothly and are processed in a reasonable amount of time.

3. Scarcity, market mechanisms, price elasticity, gross domestic product (GDP), and foreign exchange

Scarcity is favorable to our line of products. Demand for electricity is at an all time high, as it has been already demonstrated. There is an increasingly dependency on energy, which is correlated to the society’s appetite for technology. In line with this demand for energy in general, there is also demand for energy solutions that are sustainable, and that will be cost efficient in the long-run. Additionally there is a desire for energy supply that is not dependent on the electrical grid as mentioned before. However that aren’t a lot of products that satisfy these needs. Solar panels for example, which many households are installing as an alternative source of energy, are not a great solution for everybody. Many households don’t have the sun exposure that is needed for solar power to be a viable solution, and those that are able to install such a system, face limitations like the fact that solar power is only generated during the day, and that certain levels of pollution can affect the effectiveness of solar panel cells. For all of these reasons, our products are the only sensible solution for customer demand in this space. Because there aren’t similar products in the market that truly can be called competitors, price elasticity is high, since consumers should in theory purchase our line of products, even if the price fluctuates. GDP continues to grow in our country and current GDP per capita has now surpassed $53,000 (GDP per capita, 2016)). Purchasing power has grown along with it, so we are confident that households will consider our price point very reasonable and this should not be an impediment to sales growth. As we look forward to international sales and considering foreign exchange, we think that our initial price is not particularly attractive to some foreign markets because of the disparity of household incomes between our market and others will smaller and weaker economies, but part of our plan is to reduce production costs by refining several aspects of production, and this will reduce final sale price, which will make it more attractive on a global level.

4. Trade and productivity

There have been great advances in technology that have greatly enhanced processes of production, so this means that the productivity of our business will be high, which will drive overall productivity of our economy. There are several raw material used in our products that are produced abroad, so as we launch and eventually grow sales, it will drive trade as well, because we will need a large amount of raw materials, which means we will need to work with foreign companies to import all that is needed to support production. Exports of our home and business products will not be significant at first as we already mentioned, because of the initial price point which is not attractive to many foreign markets, but as we reduce our cost of production, exports will increase and we will be able to target many more markets and drive adoption of our product line internationally. The potential for exports on our automobile model is encouraging, right from the get-go. We plan to target all producers of automobiles around the world, by offering discounted prices for bulk sales which will enable them to implement our product on their automobiles and still maintain an attractive final cost to their consumers.

5. Unemployment, inflation, and the business cycle:

Unemployment is projected to drop slightly in the next few years (Unemployment Rate, 2016) and this can impact us in several ways. One one hand, with more people employed, there will be more disposable income and more households will be able to invest in our lines or products. However this also means that the available pool of workers available will decrease as unemployment also decreases, and as we look to expand production, this might affect us as well in a negative way. It will likely be harder to find qualified workers to meet our demand, and this can delay expansion as it might take longer to hire workers to support research, development and production of our products. It’s quite possible that we may look to hire contract workers from other places which have a bigger pool of unemployed and qualified workers. Another possibility is to open other facilities or move production to other areas, including other countries in order to mitigate this problem. Business cycle influence is favorable on the short to medium term. According to projections, the US economy will grow about 2% until 2020, while the European economy will see growth of about 1% (Rapoza, 2012). Although a recession will always be possible in the future, it seems there is no indication that this will happen on a short term. This means that as the economy continues to be stable, consumers should remain confident and willing to invest in our products. The same can be said for inflation, which according to to projections should hold at about 2 percent for the next few years, which is reasonable and should mean that the effect on the price point of our product line will not be substantial. Also the same can be said for all the other consumer products, so consumers will not be strained financially which means a positive outlook for our short-term sales numbers.

6. Classical and Keynesian economics and aggregate supply and demand:

Keynesian economic principles cast a favorable outlook on the introduction of our product and continued sales. Aggregate demand is largely influenced by changes in the private sector, and factors like consumer confidence and spending. As noted before, with a stable economy, and with inflation holding at a reasonable rate, along with reduced unemployment, aggregate demand should increase, which in turn should benefit us and our sales numbers. Also according to Keynesian theory increased spending by consumers will not only benefit us directly by the sales of our products, but will bring overall consumer benefits, meaning that increased spending across the board will mean financial prosperity for the consumer class, which in turn will sustain high levels of spending. If the aggregate supply remains high, it can lead to a positive situation for us, because it can lead to a period of surplus for some of the products and raw materials that we use in production. In a surplus situation, prices are reduced which means our costs of production will also be lower, and this means that our profit margin will be higher. Also it will mean that we can run several promotions and discount opportunities for our customers which can lead to greater adoption of the product. Because our product is so unique, competitive landcape is favorable, and without competitors producing similar products, there likely won’t be a surplus in our product segment, and this will mean that our price point can remain the same.

7. Conclusions and outcomes:

In summary, after a period of uncertainty, we have now developed a line of the products which is in line with the level of reliability and service that the founders of this company always intended. Our products target several segments of the market including home, business and auto. We think the respective target audiences will be very receptive to our products because there is a desire to get low-cost and long-term alternatives to traditional energy supply. There is a segment of the population that does not want to depend on the grid both for independence and safety reasons. There is also an increasing amount of people that are concerned about the environment and are looking for a sustainable form of energy supply that has very low impact on our planet. Our product is very well positioned to satisfy these various needs. The government looks favorably to the production and purchase of products that are eco-friendly, which means that several policies including tax breaks are favorable to our long-term growth. Despite strict regulations, we have been maintaining close communication with the government as we continue to develop and improve our product and this ensures that approvals have been happening smoothly. Demand for energy is at an all time high, and supply in our specific segment is low, so scarcity is one our side. GDP is expected to grow over the next few years, so we are confident about the state of the economy in the near future, and although our price point in relation to foreign exchange does not seem very attractive to some market, we are making strides in reducing our production costs in order to offer our product line at a reduced price which will lead to better trade opportunities. Still regarding trading, we have identified several foreign suppliers that we rely on to obtain various products and raw materials that we use in production, and we will continue to procure suppliers which can offer the best price possible. Inflation is projected to remain stable which means that our products can remain at the same price point in the foreseable future, and another factor to consider is unemployment which is supposed to drop slightly in the next few years. This means that more households will have disposable income. It can also mean that we will have a smaller pool of skilled workers as we think of expanding, so we might consider hire from other areas, including other countries, or think of moving operations to an area which offers a better workforce. Keynesian theory says that overall consumer spending is key to a properous economy and some of the key indicator like inflation, and unemployment seem to indicate that consumer spending will continue to be strong. For all of these factors, our final analysis suggests that our launch and short-term growth and sales will be very positive and adoption will be a success.

References:

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Fanara, A., Clark, R., Duff, R., & Polad, M. (2015, December 7). How Small Devices ar e Having a Big Impact on U.S. Utility Bills. Retrieved May 21, 2016, from https://www.energystar.gov/ia/partners/prod_development/downloads/EEDAL-145.pdf

Environmental Impacts of Natural Gas. (n.d.). Retrieved May 21, 2016, from http://www.ucsusa.org/clean_energy/our-energy-choices/coal-and-other-fossil-fuels/environmental-impacts-of-natural-gas.html#.V0DT9fniuSo

Programs - Clean Energy Technology Center. (2016, February 2). Retrieved May 21, 2016, from https://www.energystar.gov/ia/partners/prod_development/downloads/EEDAL-145.pdf

Gallagher, Kelly Sims and Erich Muehlegger. "Giving Green to Get Green: Incentives and Consumer Adoption of Hybrid Vehicle Technology." Working Paper, John F. Kennedy School of Government, Harvard University, February 2008.

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Wade, L., Phd. (2010, August 24). Ugly Shoes and Conspicuous Conservation. Retrieved May 21, 2016, from https://thesocietypages.org/socimages/2010/08/24/ugly-shoes-and-conspicuous-conservation/

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United States: Unemployment rate from 2010 to 2020. (2016, May). Retrieved May 21, 2016, from http://www.statista.com/statistics/263710/unemployment-rate-in-the-united-states/

Rapoza, K. (2012, March 26). Global Growth Forecast 2020. Retrieved May 21, 2016, from http://www.forbes.com/sites/kenrapoza/2012/03/26/global-growth-forecast-2020/#b37ff482ba53